Banks need to focus on delivering digital services to customers, or risk losing out to new non-traditional financial services companies such as supermarkets or mobile operators, a YouGov poll has shown.
The survey of 2005 adults, commissioned by financial services software provider Intelligent Environments, highlighted that while many are still loyal to banks, customers between the age of 18 and 24 could switch to new providers if demands for online and mobile banking are not met.
Currently 60 percent of respondents are more likely to trust a bank for providing financial services, with only 3 percent having more faith in supermarkets such as Tesco or Sainsbury’s, which now offer online and mobile banking services. Furthermore, 2 percent put more trust in retail companies to provide financial services, while just 1 percent would prefer to hand services over to mobile operators.
The reason for wanting to stay with a bank is less likely to be due to an unwillingness to switch provider, with most customers, 51 percent, staying loyal due to an effective online or mobile baking strategy.
While the research may have positive short term implications for traditional financial services companies, the long term picture is less certain.
Within the age group range of 18-24 year olds, 20 percent claim to have experienced frustrations with digital banking in the past year. They also experienced disappointment that current banking services are not sufficiently tailored to their needs.
In addition there was a perceived lack of consistency between digital and telephone banking services, while 20 percent viewed supermarkets as offering well integrated services across all channels.
With more emphasis being placed on mobile and online banking by a new generation of financial services customers, this could raise further concerns for the ageing infrastructure on many banks, following significant disruption to online services by large bank such as Natwest last year.
David Webber, MD of Intelligent Environments, commented that while customer loyalty to traditional banks remains strong, delivery of digital services will be "key to customer retention”.
“This sentiment amongst the important ‘emerging banking generation’ of younger current account holders will propel banks to focus on their digital offerings if they are to compete with new entrants to the market, such as retailers, who traditionally have a much stronger focus on their online offering and service.”
Another area where banks could face competition is in the delivery of mobile wallets. Although many traditional financial services companies have a presence in the UK for digital wallets, there is competition from other sectors, with a joint mobile wallet venture proposed by Vodafone, O2 and Everything Everywhere, known as “Project Oscar” received approval from the European Commission in September.
However, many banking firms have introduced similar schemes. In other news today building society Nationwide announced that it would join with Visa Europe to provide customers with the V.me digital wallet, which provides contactless point of sale transactions and person to person payments.
V.me is currently under trial with RBS, with Visa predicting that by 2020 a third of all European consumers will be using V.me.